Supreme Court: "Contract Below Lowest Estimate, Order to Pay Difference Is Justified"

[Asia Economy Reporter Heo Kyung-jun] The Supreme Court has ruled that the Fair Trade Commission's order to pay the difference in subcontracting fees is justified if a subcontract contract with a small or medium-sized enterprise was concluded at a price lower than the lowest bid price without justifiable reasons.

The Supreme Court's 2nd Division (Presiding Justice Min Yoo-sook) announced on the 14th that it overturned the lower court's ruling, which partially ruled in favor of construction company A in a lawsuit filed by A requesting the cancellation of the Fair Trade Commission's corrective order, and remanded the case to the Seoul High Court.

Company A entrusted work to company B, which offered a price lower than the lowest price determined through competitive bidding, during the selection process of subcontractors for interior construction at three apartment sites in Goyang-si, Gyeonggi Province, between 2014 and 2015.

Article 4, Paragraph 2, Subparagraph 7 of the Subcontracting Act defines "deciding subcontracting fees at an amount lower than the lowest bid price without justifiable reasons when concluding a subcontract contract through competitive bidding" as an unfair act.

Accordingly, in 2019, the Fair Trade Commission imposed a fine of 1.532 billion KRW on company A and filed a complaint. Additionally, it ordered company A to pay company B 1.451 billion KRW, the amount unfairly underpaid. Company A filed a lawsuit challenging the Fair Trade Commission's decision.

The first trial acknowledged the fine but canceled the order to pay the difference arising from deciding the subcontracting fee lower than the lowest bid price.

However, the Supreme Court ruled that "if there had been no unfair determination of subcontracting fees, it is sufficiently recognized that the subcontract contract would have been concluded at least at the lowest bid price level between the original contractor and the subcontractor," ordering payment of both the fine and the underpaid amount.

This content was produced with the assistance of AI translation services.